Amazon Box Could Be Another Ecosystem Building Block

By Peter Suciu
Apr 25, 2013 2:23 PM PT

The world's largest online retailer, Amazon, may soon challenge Apple, Google, Roku and other set-top box makers with a delivery device of its own.

Amazon has long been a favorite destination for movie buffs to buy Blu-ray discs and DVDs. More recently it's been offering digital content for streaming or download as rentals or purchases -- or in some cases, as "watch instantly" options included in Prime memberships for no extra cost.

While cable and satellite set-top boxes remain among the most popular content delivery hubs in the living room, they have been challenged by other hardware, including game consoles from Microsoft, Nintendo and Sony, which can stream a variety of content from sources like Netflix, Hulu, Vudu -- and Amazon.

Now it seems the retailer may want to cut out the middleman.

Amazon did not respond to our request for further details.

Amazon Video

What makes this rumor even more interesting is Amazon's moves in the content creation space. It recently unveiled 14 pilots and is asking viewers to help determine which shows will get the green light.

Currently, subscribers to the Amazon Prime service can view thousands of TV shows and movies at no additional cost. Currently they can access this content on certain smart TVs with built-in Internet connections, or on a PC, or on a variety of other devices capable of streaming Amazon content.

"The reality of Amazon is that it is in the TV-everywhere space," said Erik Brannon, senior analyst at IHS Screen Digest. "Now they are going out and creating a completely distinct experience."

Thinking Inside the Box

Consumers who don't have a smart TV, video game system or other compatible device can't readily view Amazon's content on their living room set.
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This is where the rumored Amazon set-top box could come in.

That said, "we've heard these rumors before and they came to nothing," noted Jonathan Gaw, research manager at IDC.

"The media adapter category itself doesn't appear all that attractive, even to a low-margin player like Amazon," he maintained.

"Apple TV is already at the top end, Roku has the value play, and there is a legion of devices in the middle," Gaw told TechNewsWorld. "A device that only streams Amazon Prime video is a non-starter."

Crowded Space

It's worth noting that Apple, which has had been a game-changer in numerous categories, has only had marginal success with its Apple TV set-top box.

That, plus the fact that there are already so many content-streaming alternatives -- game consoles, Blu-ray players and other devices -- suggests that simply releasing another box isn't likely to stir up much excitement among consumers.

"Our surveys show that of folks who stream video from the Internet to their television, Netflix is the primary reason for doing so for 60 percent of them," added Gaw. "If [Amazon] wants top billing in a streaming device, it's much easier to ink a marketing agreement with existing consumer electronics players."

Content Is King

It's conceivable that Amazon could partner with another player to make its box more attractive.

"It all depends on the licensing deals they can get. The studios are increasingly looking at options when it comes to content delivery," said Screen Digest's Brannon.

It still isn't clear why Amazon would even need its own box, though, given that its content is already widely available on a variety of devices.

"One way for an Amazon digital media adapter to make sense would be as an adjunct to a Kindle Fire -- the special sauce that links the two," said Gaw.

"Amazon would still have to incorporate other online video services, but they might be able to craft a low-margin device where the two work better together," he suggested.

"It's something that Apple has been trying to do at the high end," Gaw observed. "Perhaps Amazon could do it at the low end."